<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORRECTIONS CORPORATION OF AMERICA
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date filed:
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*Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[CCA LOGO]
March 31, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Corrections Corporation of America to be held at 10:00 a.m., local time, on
Tuesday, May 12, 1998, at the Loews Vanderbilt Plaza Hotel, 2100 West End
Avenue, Nashville, Tennessee.
The formal Notice of the meeting, as well as the proxy statement and form
of proxy, each of which contain information with respect to the meeting, are
included with this letter. A copy of the Company's 1997 Annual Report to
Shareholders is also enclosed for your review.
During the meeting, in addition to a discussion of the specific matters to
be acted upon at the meeting, which are described in detail in the accompanying
proxy statement, there will be a review of the Company's recently completed 1997
fiscal year, a report on the progress of the Company and an opportunity for
shareholders to ask management questions of general interest.
Regardless of the number of shares you own, it is important that your views
be represented. Accordingly, whether or not you plan to attend the meeting in
person, I urge you to complete, sign, date and promptly return the enclosed
proxy card in the envelope provided. If you choose to attend the meeting, you
may revoke your proxy and personally cast your votes.
Your Board of Directors and management look forward to greeting those
shareholders who are able to attend.
Sincerely,
Doctor R. Crants
Chairman, Chief Executive Officer,
and President
<PAGE> 3
CORRECTIONS CORPORATION OF AMERICA
10 BURTON HILLS BOULEVARD
NASHVILLE, TENNESSEE 37215
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 12, 1998
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Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Corrections Corporation of America (the "Company") will be held at
10:00 a.m., local time, on Tuesday, May 12, 1998, at the Loews Vanderbilt Plaza
Hotel, 2100 West End Avenue, Nashville, Tennessee, for the following purposes:
(1) To consider and elect a Board of Directors to serve for a term of
one (1) year, until the 1999 annual meeting of Company's shareholders, and
until their respective successors are elected and qualified;
(2) To consider and approve the Company's Non-Employee Directors'
Compensation Plan whereby the Non-Employee Directors of the Company may
elect to receive the cash compensation they are entitled to as an annual
retainer for serving as a director of the Company in the form of shares of
the Company's Common Stock;
(3) To consider and ratify the grant of an option to purchase 80,000
shares of the Company's Common Stock to Joseph F. Johnson, Jr., a director
of the Company, in consideration for his extensive efforts in building and
facilitating the Company's business relationship with certain governmental
departments, agencies and entities;
(4) To consider and ratify the action of the Board of Directors in
selecting the firm of Arthur Andersen LLP to be the independent auditors of
the Company for the fiscal year ending December 31, 1998, and to perform
such other services as may be requested; and
(5) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Pursuant to the Bylaws of the Company, the Board of Directors of the
Company has fixed the close of business on Tuesday, March 17, 1998, as the
record date for determination of shareholders entitled to notice of and to vote
at the Annual Meeting and at any adjournments or postponements thereof. Only
shareholders of record of the Company's Common Stock and Series B Convertible
Preferred Stock at the close of business on that date will be entitled to notice
of and to vote at the Annual Meeting and at any adjournments or postponements
thereof.
Your attention is directed to the proxy statement accompanying this Notice
of Annual Meeting for more complete information regarding the matters to be
presented and acted upon at the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person.
By Order of the Board of Directors
Darrell K. Massengale, Secretary
March 31, 1998
Nashville, Tennessee
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED, AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING IN PERSON, YOU MAY
WITHDRAW YOUR PROXY AND PERSONALLY CAST YOUR VOTE AT THE MEETING.
<PAGE> 4
CORRECTIONS CORPORATION OF AMERICA
10 BURTON HILLS BOULEVARD
NASHVILLE, TENNESSEE 37215
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 12, 1998
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Corrections Corporation of America, a
Tennessee corporation (the "Company" or "CCA"), from holders of the Company's
common stock, $1.00 par value per share (the "Common Stock"), and the Company's
Series B Convertible Preferred Stock, $1.00 par value per share (the "Preferred
Stock") (the Common Stock and the Preferred Stock are sometimes hereinafter
referred to, collectively, as the "Shares"), for use at the 1998 Annual Meeting
of Shareholders of the Company (the "Annual Meeting") to be held at 10:00 a.m.,
local time, on Tuesday, May 12, 1998, at the Loews Vanderbilt Plaza Hotel, 2100
West End Avenue, Nashville, Tennessee, and at any adjournments or postponements
thereof.
At the Annual Meeting shareholders will be asked to vote:
(i) to elect a Board of Directors to serve for a term of one (1) year,
until the 1999 annual meeting of Company's shareholders, and until their
respective successors are elected and qualified;
(ii) to approve the Company's Non-Employee Directors' Compensation
Plan (the "Plan") whereby the Non-Employee Directors of the Company may
elect to receive the cash compensation they are entitled to as an annual
retainer for serving as a director of the Company in the form of shares of
the Company's Common Stock;
(iii) to ratify the grant of an option to purchase 80,000 shares of
the Company's Common Stock to Joseph F. Johnson, Jr., a director of the
Company, in consideration for his extensive efforts in building and
facilitating the Company's business relationship with certain governmental
departments, agencies and entities;
(iv) to ratify the action of the Board of Directors in selecting the
firm of Arthur Andersen LLP to be the independent auditors of the Company
for the fiscal year ending December 31, 1998, and to perform such other
services as may be requested; and
(v) upon such other matters as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on Tuesday, March
17, 1998, as the record date for the Annual Meeting (the "Record Date"). Only
shareholders of record at the close of business on the Record Date are entitled
to notice of and to vote at the Annual Meeting. At the close of business on such
date, there were 80,187,742 shares of Common Stock and 379,882 shares of
Preferred Stock issued and outstanding and entitled to vote at the Annual
Meeting. The holders of the Company's Common Stock and the holders of the
Company's Preferred Stock vote together as a single class on all matters
submitted to a vote of the shareholders. Each share of Common Stock and each
share of Preferred Stock entitles the holder thereof to one vote on each matter
to be considered at the Annual Meeting. A quorum (i.e., holders of record of a
majority of the Shares outstanding and entitled to vote at the Annual Meeting)
is required for the transaction of any business at the Annual Meeting. Assuming
a quorum is present with respect to such matters, the affirmative vote of a
plurality of the Shares cast is required for the election of Directors.
Shareholders do not have cumulative voting rights with respect to the election
of Directors. The affirmative vote of the holders of a majority of the Shares
cast is required for the approval of all other proposals, including any other
matter to properly come before the Annual Meeting, and such proposal will be
approved if the votes cast favoring such proposal exceed the votes cast opposing
the proposal. Accordingly, pursuant to Tennessee law, although
<PAGE> 5
abstentions are treated as present and entitled to vote and, therefore, will be
counted in determining whether a quorum is present, they will have no effect on
the outcome of any votes. A broker non-vote (i.e., shares held by brokers or
nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote and as to which the broker or nominee does
not have discretionary power to vote on a particular matter) will not be counted
in determining whether a quorum is present and will have no effect on the
outcome of any votes.
The Shares held by each shareholder who signs and returns the enclosed
proxy will be counted for purposes of determining the presence of a quorum at
the meeting unless such proxy shall be timely revoked. If the enclosed form of
proxy is executed and returned, it may, nevertheless, be revoked at any time
before it is voted by delivery of a written revocation or a duly executed proxy
bearing a later date to the Secretary of the Company at its headquarters or by
the shareholder personally attending and voting his or her Shares at the Annual
Meeting.
When a proxy card is returned properly signed and dated by a shareholder,
the Shares represented thereby will be voted in accordance with the instructions
on the proxy card. If a shareholder returns a properly executed proxy card but
does not mark the boxes located on the card and does not revoke such proxy prior
to the Annual Meeting, the Shares represented thereby will be voted (i) FOR the
director nominees named in the proxy statement, (ii) FOR approval of the Plan,
(iii) FOR adoption of the grant of an option to Joseph F. Johnson, Jr., and (iv)
FOR the ratification of the selection of Arthur Andersen LLP as the independent
auditors of the Company. Management does not know of any other matters which are
to be brought to a vote at the Annual Meeting. However, if any other matter
properly does come before the Annual Meeting, the persons appointed in the proxy
or their substitutes will vote in accordance with their best judgment on such
matter(s).
The cost of soliciting proxies by the Board of Directors will be borne by
the Company, including expenses in connection with preparing, assembling and
mailing this proxy statement. Such solicitation will initially be made by mail.
The Company has retained Corporate Communications, Inc. to assist in the
solicitation of proxies. It is estimated that Corporate Communications, Inc.'s
fees for such services will be approximately $5,000, plus all out-of-pocket
costs and expenses. In addition, proxy solicitation may be made personally or by
telephone or facsimile by directors, officers and employees of the Company, none
of whom will receive additional compensation for these services. Forms of
proxies and proxy materials will also be distributed through brokers, custodians
and other like parties to the beneficial owners of the Shares. The Company will
reimburse such parties for the reasonable out-of-pocket expenses incurred in
connection with such distribution.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of Directors
shall consist of not less than three members and that the actual number of
directors comprising the Board of Directors shall be determined from time to
time by the vote of two-thirds of the entire Board of Directors. Currently, the
Company's Board of Directors has seven members, each of whom's term expires at
the Annual Meeting. The current Board of Directors has determined that the
number of directors shall remain at seven and that seven directors shall be
elected at the Annual Meeting to serve for a term of one (1) year, until the
1999 Annual Meeting of Shareholders, subject to the provisions of the Bylaws,
and until his successor is duly elected and qualified. The current Board of
Directors consists of the following seven members: William F. Andrews, Samuel W.
Bartholomew, Jr., Thomas W. Beasley, Doctor R. Crants, Jean-Pierre Cuny, Joseph
F. Johnson, Jr., and R. Clayton McWhorter. Mr. Andrews has asked that he not
stand for re-election and thus is not a nominee to be elected as a director at
the Annual Meeting. At its March 1998 meeting, the Board of Directors, following
the recommendation of its Nominating Committee, nominated seven individuals to
stand for election at the Annual Meeting. One nominee, Lucius E. Burch, is not
currently serving on the Company's Board of Directors. Each nominee has
consented to be a candidate and to be so named in this proxy statement and to
serve, if elected.
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Unless contrary instructions are received, the Company's Shares represented
by duly executed proxies and received in the accompanying form will be voted in
favor of the election of the nominees named herein. The Board of Directors does
not contemplate that any of the nominees will be unable to accept election as a
director. However, in the event that one or more nominees are unable or
unwilling to accept or are unavailable to serve, the persons named in the
proxies or their substitutes will have authority, according to their judgment,
to vote, or refrain from voting, for other individuals as directors.
NOMINEES FOR THE BOARD OF DIRECTORS
Biographical information concerning each of the nominees is set forth
below. Six of the nominees are presently serving on the Board.
SAMUEL W. BARTHOLOMEW, JR. (age-53) has served as a director of the Company
since June 1991. Mr. Bartholomew founded and is Chairman of the Nashville law
firm of Stokes & Bartholomew, P.A., which serves as general counsel to the
Company. See "Certain Relationships and Related Transactions." Mr. Bartholomew
is a member of the Nashville and Tennessee Bar Associations, and was installed
as a Fellow in both the Tennessee and Nashville Bar Foundations. He also serves
on the Board of Directors of SunTrust Bank Nashville and on the Board of
Managers of KACL Holdings, LLC, a printing company, and has served as a
Presidential Appointment to the Federal National Mortgage Association (FANNIE
MAE) Board of Directors. He is the Tennessee Chairman of the U.S. Olympic
Committee and is active on the board of numerous civic organizations. Mr.
Bartholomew graduated from the United States Military Academy at West Point in
1966 and received a Doctor of Jurisprudence degree, Order of the Coif, from
Vanderbilt University School of Law in 1973, where he subsequently chaired the
Dean's Council and taught seminars on Corporate Strategy and Business Law.(1)(2)
THOMAS W. BEASLEY (age-55), a founder of the Company, was elected Chairman
Emeritus of the Board of Directors of the Company in June 1994. From June 1987
to June 1994, he served as Chairman of the Board of Directors of the Company.
Mr. Beasley served as President of the Company from January 1983 to June 1987.
He has served as a director since 1983. Mr. Beasley currently serves as a
director for Community Education Partners, Inc., a privately-held company
providing private educational services to various governments, and is President
of Dixon Springs Investments, Inc., a private real estate investment company.
From 1974 through 1978, Mr. Beasley served as Chairman of the Tennessee
Republican Party, and he continues to be active in Tennessee politics. Mr.
Beasley graduated from the United States Military Academy at West Point in 1966
and received a Doctor of Jurisprudence degree from Vanderbilt University School
of Law in 1973.(4)
LUCIUS E. BURCH, III (age-57) has served as Chairman of Massey Burch
Investment Group, Inc., a venture capital company in Nashville, Tennessee, since
October 1989. He served as its President from 1981 until October 1989 and as its
Vice President from 1968 until June 1981. Mr. Burch currently serves on the
Board of Directors of Norrell Corporation, a publicly traded company and a
leading provider of staffing, outsourcing, and professional services; QMS, Inc.,
a producer of intelligent graphic systems and laser printers; Titan Holding,
Inc., an insurance holding company, and Physician Resource Group. Mr. Burch
graduated from the University of North Carolina where he received a B.A. degree
in 1963.
DOCTOR R. CRANTS (age-53), a founder of the Company, was elected Chief
Executive Officer and Chairman of the Board of the Company in June 1994 and was
named President of the Company in January 1998. From June 1987 to June 1994, he
served as President, Chief Executive Officer and Vice Chairman of the Board of
Directors of the Company. From January 1983 through June 1987, Mr. Crants served
as Secretary and Treasurer of the Company. He has served as a director of the
Company since 1983. Mr. Crants currently serves as Chairman of the Board of
Trustees of CCA Prison Realty Trust, a publicly
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(1) Member of the Audit Committee, of which R. Clayton McWhorter is Chairman.
(2) Member of the Compensation Committee, of which Samuel W. Bartholomew, Jr. is
Chairman.
(3) Member of the Stock Plan Subcommittee.
(4) Member of the Nominating Committee.
3
<PAGE> 7
traded real estate investment trust which develops and owns corrections and
detention facilities, including thirteen facilities currently operated by the
Company. It is anticipated that Mr. Crants will serve on the Board of Directors
of Sodexho Marriott Services, Inc. Sodexho Marriott Services, Inc. is expected
to be formed on or about the date of this Proxy Statement as the result of the
merger of Marriott International Inc.'s food service and facility management
business with the North American operation of Sodexho (as hereinafter defined).
If such merger is consummated, Sodexho Marriott Services, Inc. will be the
largest food service and facilities management company in North America. See
"Certain Relationships and Related Transactions." Mr. Crants graduated from the
United States Military Academy at West Point in 1966, and received a joint
Masters in Business Administration and Juris Doctor degrees from the Harvard
Business School and Harvard Law School, respectively, in 1974.(4)
JEAN-PIERRE CUNY (age-43) has served as a director of the Company since
July 1994. Mr. Cuny serves as the Senior Vice President of The Sodexho Group, a
French-based, leading supplier of catering and various other services to
institutions. From February 1982 to June 1987, he served as Vice President in
charge of Development for the aluminum semi-fabricated productions division of
Pechiney, a diversified aluminum and other materials integrated producer. Mr.
Cuny graduated from Ecole Polytechnique in Paris in 1977 and from Stanford
University Engineering School in 1978 Mr. Cuny was elected to the Board of
Directors pursuant to the Securities Purchase Agreement between the Company and
Sodexho Alliance S.A. ("Sodexho"), of which The Sodexho Group is an affiliate.
See "Certain Relationships and Related Transactions."(1)
JOSEPH F. JOHNSON, JR. (age-47) has served as a director of the Company
since May 1996. He serves as Chairman and CEO of The Johnson Companies, a group
of closely held companies involved in government relations and corrections,
which includes Johnson & Associates, a government relations and consulting firm.
In 1994, Mr. Johnson founded National Corrections & Rehabilitation Corporation,
a correctional services company, which specializes in providing education,
vocational training, substance abuse treatment and medical care programs to
inmates. See "Certain Relationships and Related Transactions." In 1992, Mr.
Johnson served as National Campaign Manager and political advisor to Virginia
Governor Douglas Wilder. In 1994, Mr. Johnson served as District of Columbia
Council member John Ray's top political strategist. Mr. Johnson served as
Secretary of Health under New Mexico Governor Tony Anaya in the mid-1980's and
as Executive Director of Reverend Jesse Jackson's Rainbow Coalition in the late
1980's. Mr. Johnson graduated from New Mexico State University, where he
received a B.A. in Political Science in 1974 and a M.A. in Public Administration
in 1976.(2)
R. CLAYTON MCWHORTER (age-64) has served as a director of the Company since
May 1996. He served as Chairman of Columbia/HCA Healthcare Corporation from
April 1995 to May 1996. Mr. McWhorter remains a member of the Board of Directors
of Columbia/HCA and is currently the Chairman of the Board of LifeTrust America,
L.L.C., a privately-held company engaged in the assisted living business. He is
also a principal in Clayton Associates, a limited liability company, which
provides venture capital to start-up companies. In September 1987, Mr. McWhorter
participated in the formation of HealthTrust, Inc. and served as its Chairman,
President and Chief Executive Officer until its merger with Columbia/HCA in
April 1995. Mr. McWhorter is a director of SunTrust Bank Nashville, StaffMark,
Inc., Ingram Industries, Inc., the Metropolitan Nashville Airport Authority and
the YMCA. He is also a member of the Board of Trustees for The University of
Tennessee, the Board of the Foundation for State Legislatures, the Nashville
Area Chamber of Commerce, and the Advisory Board of the YWCA. From 1951 through
1952, Mr. McWhorter attended the University of Tennessee, Knoxville,
pre-pharmacy program and earned his B.S. degree in Pharmacy in 1955 from Samford
University in Birmingham, Alabama. Belmont University in Nashville has named Mr.
McWhorter Distinguished Professor of Entrepreneurship at its Jack C. Massey
Graduate School of Business.(1)(2)(3)
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(1) Member of the Audit Committee, of which R. Clayton McWhorter is Chairman.
(2) Member of the Compensation Committee, of which Samuel W. Bartholomew, Jr. is
Chairman.
(3) Member of the Stock Plan Subcommittee.
(4) Member of the Nominating Committee.
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The information given in this Proxy Statement concerning the nominees is
based upon statements made or confirmed to the Company by or on behalf of such
nominees, except to the extent certain information appears in the Company's
records. Directors' ages are given as of March 1, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED
HEREIN.
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CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1997, the Board of Directors of the Company held six meetings. Each
director attended 75% or more of the aggregate number of meetings held by the
Board and the respective committees on which he served. The Board of Directors
of the Company has three committees: the Audit Committee, the Compensation
Committee, and the Nominating Committee. The Compensation Committee has one
subcommittee: the Stock Plan Subcommittee.
Audit Committee. The Audit Committee currently consists of Messrs.
Andrews, Bartholomew, Cuny and McWhorter and is responsible for making
recommendations to the Board for the selection and remuneration of independent
auditors to audit the Company's annual financial statements. The Audit Committee
also reviews: (i) the results and findings of audits performed by the
independent auditors; (ii) the Company's systems of internal accounting controls
and significant accounting policies; and (iii) the nature of nonaudited services
performed by the independent auditors. It is anticipated that Mr. Burch, if
elected, will be appointed to the Audit Committee to replace Mr. Andrews. During
1997, the Audit Committee met twice.
Compensation Committee. The Compensation Committee currently consists of
Messrs. Andrews, Bartholomew, Johnson and McWhorter and is responsible for
reviewing the compensation of the Chief Executive Officer and other officers and
key management of the Company and for making recommendations thereon to the
Board. In carrying out such responsibilities, the Compensation Committee reviews
the salaries and benefits of key employees and recommends performance targets
under the Company's bonus plan. It is anticipated that Mr. Burch, if elected,
will be appointed to the Compensation Committee to replace Mr. Andrews. During
1997, the Compensation Committee met four times.
Stock Plan Subcommittee. To comply with the requirements of Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in March
1998, the Compensation Committee delegated the responsibility of administering
the Company's stock option plans and employee stock ownership plans to the Stock
Plan Subcommittee of the Compensation Committee. The Stock Plan Subcommittee is
also responsible for approving all grants under the Company's stock option plans
and employee stock ownership plans. The Stock Plan Subcommittee consists of
Messrs. Andrews and McWhorter. It is anticipated that Mr. Burch, if elected,
will be appointed to the Stock Plan Subcommittee to replace Mr. Andrews.
Nominating Committee. The Nominating Committee currently consists of
Messrs. Beasley and Crants and is responsible for recommending to the Board
suitable persons for election as directors of the Company. The Nominating
Committee will consider nominees recommended by shareholders provided that the
names of such persons are submitted no later than the date established for the
submission of shareholder proposals for action at the Company's next annual
meeting of shareholders. See "Shareholder Proposals for 1999 Annual Meeting."
During 1997, the Nominating Committee met once.
DIRECTOR COMPENSATION
No compensation is paid to executive officers of the Company for services
rendered in their capacities as directors. Each non-employee director is
entitled to receive a fee of $1,000 for attendance at each meeting of the Board
and a fee of $500 for attendance at each meeting of any committee of the Board
on which he serves. An additional fee of $250 is paid to the chairman of each
committee for each committee meeting he chairs. The Company has also authorized
the payment of an annual retainer fee of $24,000 to each non-employee director,
effective June 1, 1998, which shall be in addition to any other compensation
such director is currently entitled to receive. In addition to receiving the
aforementioned fees, all non-employee directors are reimbursed for expenses
incurred in connection with their attendance at meetings of the Board or any of
its committees. Pending shareholder approval of the Non-Employee Directors'
Compensation Plan at the Annual Meeting, non-employee directors may elect to
receive the cash compensation they are entitled to as an annual retainer for
serving as a director of the Company in the form of shares of the Company's
Common Stock. See "Shareholder Proposal 2 -- Approval of Non-Employee Directors'
Compensation Plan." Non-employee
6
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directors are also entitled to participate in the Company's Non-Employee
Directors' Stock Option Plan (the "Directors' Plan").
MANAGEMENT
Except as otherwise described under "Management -- Employment Agreements"
herein, the executive officers of the Company are elected annually by the Board
of Directors following the annual meeting of shareholders to serve one-year
terms. Biographical information concerning those executive officers of the
Company who are also directors of the Company is set forth under "Proposal
1 -- Election of Directors" in this Proxy Statement. Biographical information
concerning all other executive officers of the Company is set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Doctor R. Crants..................... 53 Chairman of the Board; Chief Executive Officer;
President; Director
Thomas W. Beasley.................... 55 Chairman Emeritus of the Board; Director
David L. Myers....................... 54 President, West Coast Region
Darrell K. Massengale................ 37 Chief Financial Officer; Vice President, Finance;
Secretary; and Treasurer
Charles A. Blanchette, Jr............ 47 Vice President, Operations
Dennis E. Bradby..................... 48 Vice President, Education Services
Linda G. Cooper...................... 47 Vice President, Legal Affairs
Susan Hart........................... 37 Vice President, Communications
Peggy W. Lawrence.................... 42 Vice President, Investor Relations
John D. Rees......................... 51 Vice President, Business Development
Linda A. Staley...................... 53 Vice President, Project Development
Gay Etheridge Vick, III.............. 50 Vice President, International Operations; and Managing
Director, CCA International
</TABLE>
DAVID L. MYERS became President of the Company's newly formed West Coast
Region in January 1998. He served as President of the Company from June 1994 to
January 1998. From December 1986 to June 1994, he served as Vice President,
Facility Operations of the Company. From September 1985 to December 1986, he
served as Administrator of the Company's Bay County, Florida facility. From 1968
to 1985, Mr. Myers was employed with the Texas Department of Corrections,
starting as a corrections officer in 1968 and progressing in 1973 to warden of a
maximum security prison. He graduated from Sam Houston State University in 1969.
DARRELL K. MASSENGALE joined the Company in February 1986 and in March 1991
became its Vice President, Finance, Secretary, and Treasurer. In June 1994, he
was also elected Chief Financial Officer of the Company. From February 1986 to
March 1991, Mr. Massengale served as Controller of the Company. He is a
certified public accountant who was employed by the accounting firm of KPMG Peat
Marwick from 1982 through 1986. Mr. Massengale graduated from Middle Tennessee
State University in 1982 and became a certified public accountant in 1985.
CHARLES A. BLANCHETTE, JR. was elected Vice President, Operations of the
Company in November 1996. In 1995, Mr. Blanchette was appointed Director of
Facility Start-Up for the Company and in 1996 was named Division Coordinator in
the Operations Department. Prior to his move to the corporate office, Mr.
Blanchette directed successful the start-ups of the Leavenworth Detention Center
in 1992 and Central Arizona Detention Center in 1994. From 1987 to 1995, he
served as warden for a number of the Company's correctional facilities. Prior to
joining the Company in 1987, Mr. Blanchette worked for 16 years with the Texas
Department of Corrections. Mr. Blanchette graduated from Alvin Community College
in Texas in 1974 and received specialized training from Texas A&M University,
the National Institute of Justice and the Federal Bureau of Investigation.
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<PAGE> 11
DENNIS E. BRADBY has served as Vice President, Education Services of the
Company since June 1991. From April 1986 through June 1991, Mr. Bradby served as
the Company's Vice President, Operational Support Systems. From January 1986
through April 1986, Mr. Bradby served as the Facility Administrator of the
Company's Silverdale Facility and, from March 1984 through January 1986, as the
Facility Administrator of the Company's Houston Immigration Detention facility.
He served as Regional Manager of the Virginia State Department of Corrections
from 1977 through March 1984 and as the Assistant Superintendent of that
department from 1974 through 1978. Mr. Bradby also served as Assistant
Superintendent of the Juvenile Detention Facility in Norfolk, Virginia from 1973
through 1974. Mr. Bradby graduated from Norfolk State University in 1972.
LINDA G. COOPER joined the Company in April 1987 as Senior Legal Counsel.
In May 1988, she was elected Assistant Secretary for the Company and in January
1989 became its Vice President, Legal Affairs. From December 1981 to March 1987,
she served as Staff Attorney and then Deputy General Counsel for the Kentucky
Corrections Cabinet. Ms. Cooper received a Juris Doctor degree from the
University of Kentucky in 1979.
SUSAN HART was elected Vice President, Communications in June 1996. From
1993 to 1996, she served as Director, Communications of the Company. From 1989
to 1993, she served as Director of Public Relations for the American Red Cross
Blood Services. Ms. Hart graduated from Auburn University in 1981 with a major
in Communications and became an accredited public relations practitioner in
1990.
PEGGY W. LAWRENCE became Vice President, Investor Relations of the Company
in June 1995. From June 1989 to June 1995, she served as Vice President,
Communications for the Company and from March 1987 to June 1989, she served as
the Company's Director of Communications. From January 1985 to March 1987, she
served as an account executive for Dye, Van Mol and Lawrence Public Relations.
From January 1980 to January 1985, Ms. Lawrence served as Vice President,
Research at Morgan Keegan & Co., an investment banking firm. Ms. Lawrence
graduated from the University of Tennessee at Knoxville in 1977 and became a
Chartered Financial Analyst in 1984.
JOHN D. REES was elected Vice President, Business Development for the
Company in June 1994. From 1969 until 1986, when he joined the Company, Mr. Rees
served as warden of the Kentucky State Reformatory and as an administrator with
the Kentucky and Oklahoma State Corrections Departments. Mr. Rees holds a
Bachelor of Arts degree from the University of Kentucky, with majors in
Criminology, Correctional Administration and Sociology, and a Master of Science
degree from Florida State University.
LINDA A. STALEY was elected Vice President, Project Development for the
Company in June 1994. She joined the Company in 1985 as Director, Project
Development. Prior to joining the Company, Ms. Staley spent 18 years working for
federal governmental agencies, including the Department of Justice and the
Immigration and Naturalization Service in the contracting and procurement field.
Ms. Staley attended Wayne State College, where she studied business
administration.
GAY ETHERIDGE VICK, III was elected Vice President and Managing Director of
the Company's International Operations in June 1994. From January 1987 to June
1994, he served as Vice President, Project Development for the Company. From
April 1984 to December 1986, Mr. Vick served as Vice President, Design and
Construction for the Company. From April 1983 to April 1984, he served as
President of Vick and Harris, Ltd., where he masterplanned correctional and
detention facilities. Mr. Vick graduated from Virginia Tech in 1970.
EMPLOYMENT AGREEMENTS
The Company currently has an Employment Agreement with Mr. Crants for a
term of three (3) years terminating in March 2001 (the "Agreement"). The
Agreement provides that, unless the Company notifies Mr. Crants that his
employment under the Agreement will not be extended, the employment shall
automatically be extended for an additional three-year period on the same terms
and conditions as set forth therein. The Agreement provides that Mr. Crants
shall be paid a minimum salary of $350,000 per year subject
8
<PAGE> 12
to increase on an annual basis at the discretion of the Board of Directors of
the Company and its Compensation Committee. The Agreement also provides for
bonus compensation to be paid at the discretion of the Company's Board of
Directors and that Mr. Crants may participate in any bonus plan established for
executive employees. The Agreement provides that if Mr. Crants' employment is
terminated for any certain specified reasons, Mr. Crants shall receive the full
amount of his salary at the date of termination for a total period of three (3)
years. Under the terms of the Agreement, Mr. Crants is subject to restrictive
covenants of confidentiality, non-competition and non-solicitation. The Company
has no other employment agreements with any of its executive officers.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company during the three fiscal years ended December 31, 1995, 1996 and 1997 to
the Chief Executive Officer of the Company and each of the four most highly
compensated executive officers of the Company as of December 31, 1997
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------
AWARDS(1)
------------------------- PAYOUTS
ANNUAL COMPENSATION SECURITIES -------------------------
--------------------------------------------- RESTRICTED UNDERLYING ALL OTHER
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) SARS(#) PAYOUTS($) ($)(2)
- ------------------ ---- --------- -------- --------------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Doctor R. Crants......... 1997 $359,423 -- -- -- 15,000 -- $7,450
Chairman of the Board, 1996 344,23 -- -- -- 30,000 -- 7,350
Chief Executive Officer 1995 313,461 -- -- $2,370,000(1) 70,000 -- 7,350
and President
Thomas W. Beasley........ 1997 175,000 -- -- -- -- -- 4,850
Chairman Emeritus 1996 175,000 -- -- -- -- -- 4,750
1995 175,000 -- -- -- -- -- 4,625
David L. Myers........... 1997 196,861 -- -- -- 5,000 -- 7,225
President, West Coast 1996 190,206 -- -- -- 12,000 -- 4,750
Region 1995 153,715 -- -- 1,000,000(1) 60,000 -- 4,675
Darrell K. Massengale.... 1997 166,773 -- -- -- 7,000 -- 6,800
Chief Financial 1996 161,140 -- -- -- 12,000 -- 6,540
Officer; Secretary; 1995 126,487 -- -- 300,000(1) 40,000 -- 4,682
Treasurer; and Vice
President, Finance
Charles A. Blanchette,
Jr..................... 1997 144,381 -- -- -- 5,000 -- 4,004
Vice President -- 1996 95,791 -- -- -- -- -- 3,817
Operations 1995 94,469 -- -- -- -- -- 3,830
</TABLE>
- ---------------
(1) The Company does not currently maintain a formal "Long Term Incentive Plan."
The Company has entered into agreements to issue deferred shares of Common
Stock to the executive officers listed above in accordance with the
Company's 1988 Stock Bonus Plan. Generally, under the terms of the
agreements with the executives, the deferred shares do not vest until the
earliest of the following dates: (i) 10 years after the date the shares are
awarded to the executive; (ii) in the event of the death or disability of
such executive; or (iii) in the event of a change in control of the Company
as defined in the deferred stock bonus agreements. Prior to vesting, the
deferred shares will carry no voting or dividend rights. The values set
forth in the table above are as of the date of grant.
(2) Amounts represent Company contributions to the Company's Amended and
Restated Employee Stock Option Plan (the "ESOP"), as calculated on December
31 of each year.
9
<PAGE> 13
OPTION GRANTS IN 1997
The following table sets forth information concerning options to purchase
shares of the Company's Common Stock granted in 1997 to those persons who, as of
December 31, 1997, were the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED
--------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
NUMBER OF OPTIONS EXERCISE APPRECIATION
SECURITIES GRANTED TO OR BASE FOR OPTION TERM(1)
UNDERLYING EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME OPTIONS GRANTED FISCAL YEAR(2) ($/SHARE)(3) DATE 5% ($) 10% ($)
- ---- --------------- ----------------- ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants................ 15,000 4.5% $24.25 3/20/2007 $228,760 $579,724
Mr. Beasley............... 0 -- -- -- -- --
Mr. Myers................. 5,000 1.5 24.25 3/20/2007 72,253 193,241
Mr. Massengale............ 7,000 2.1 24.25 3/20/2007 106,755 270,538
Mr. Blanchette............ 5,000 1.5 24.25 3/20/2007 72,253 193,241
</TABLE>
- ---------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission (the
"Commission") and therefore are not intended to forecast possible future
appreciation, if any, of the Common Stock price.
(2) The percent of stock options granted to each Named Executive Officer is
based on the total number of stock options granted, which amounted to
336,000 during 1997.
(3) All options granted to Named Executive Officers have exercise prices equal
to the fair market value (closing price per share of Common Stock on the New
York Stock Exchange on the date of grant). The exercise price related to the
exercise may be paid by delivery of shares of Common Stock. All options
become exercisable beginning on the later of (a) the second anniversary of
initial employment by the Company or (b) the first anniversary of the date
of grant and may be exercised until the earlier of (x) the tenth anniversary
of the date of grant, (y) the date the optioned ceases to be an employee or
director of the Company for any reason other than death or disability, or
(z) the first anniversary of the optioned's death or disability.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END VALUES
The following table sets forth information with respect to exercises of
options by the Named Executive Officers during 1997 pursuant to the Company's
stock option plans, and information with respect to unexercised options held by
the Named Executive Officers as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES HELD AT IN-THE-MONEY OPTIONS
ACQUIRED DECEMBER 31, 1997 AT DECEMBER 31, 1997(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Crants...................... $ -- $ -- 400,000 15,000 $13,177,500 $192,188
Mr. Beasley..................... -- -- 60,000 -0- 2,101,875 -0-
Mr. Myers....................... 28,000 838,760 164,400 5,000 5,234,066 64,063
Mr. Massengale.................. 89,600 2,083,863 52,000 7,000 1,378,750 89,688
Mr. Blanchette.................. 50,000 2,047,938 52,000 5,000 1,438,750 64,063
</TABLE>
- ---------------
(1) These amounts represent the market value of the underlying Common Stock on
the date of exercise, less the applicable exercise price.
(2) These amounts were calculated by subtracting the exercise price from the
market price of the underlying Common Stock as of year end. The market value
of the Common Stock was $37.06 per share as of December 31, 1997 (the last
trading date in 1997) based on the closing price per share on the New York
Stock Exchange.
The Company has not awarded stock appreciation rights to any employee and
has no long term incentive plans, as that term is defined in regulations
promulgated by the Commission. The Company has various stock option plans (the
"Stock Option Plans"), an Incentive Compensation Plan (the "Incentive
Compensation Plan"), and the ESOP. The Company presently has no defined benefit
or actuarial plans covering any employees of the Company.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee is composed of four independent directors, none
of whom are employees of CCA or its affiliates or subsidiaries. The Committee is
responsible for setting and administering the policies and programs that govern
both annual compensation and stock ownership programs for the executive officers
of the Company. The Company's executive compensation policy is based on
principles designed to ensure that an appropriate relationship exists between
executive pay and corporate performance while at the same time motivating and
retaining executive officers.
COMPENSATION COMPONENTS
The key components of the Company's compensation program are base salary,
an annual incentive award, equity participation, and health and welfare and
retirement benefits. These components are administered with the goal of
providing total compensation that is competitive in the marketplace, rewards
successful financial performance and aligns executive officers' interests with
those of shareholders. The Compensation Committee reviews each component of
executive compensation on an annual basis.
In 1997, the Committee engaged the independent accounting firm of Arthur
Andersen LLP ("Arthur Andersen") to further develop, review, and make
recommendations concerning the compensation program for the Company's executive
officers. In evaluating the Company's compensation program, Arthur Andersen
assessed the current and planned compensation of the Company's executive
officers as compared to that of companies with similar annual revenues and
capitalization (the "Comparison Group"), including those companies included in
the index of peer companies which are used in the performance graph (the "1997
Peer Group") included in this Proxy Statement. The 1997 Peer Group includes
those companies that are either direct competitors of the Company or other
regional service organizations with similar market capitalization to the
Company. The Committee plans to continue to utilize the services of Arthur
Andersen in reviewing executive compensation.
BASE SALARY
In the first quarter of each fiscal year, the Compensation Committee, along
with the Chief Executive Officer of the Company, review and approve an annual
salary plan for the Company's executive officers. This salary plan is developed
by the Company's Chief Executive Officer. Many subjective factors are included
in determining base salaries such as the responsibilities borne by the executive
officer, the scope of the position, length of service with the Company,
corporate and individual performance, and the salaries paid by companies in the
Comparison Group to officers in similar positions. While these subjective
factors are then integrated with other objective factors, including net income,
earnings per share, return on equity and growth of the Company, the overall
assessment is primarily a subjective one, intended to reflect the level of
responsibility and individual performance of the particular executive officer.
The Committee believes that executive officer base salaries in 1997, as a whole,
were lower than the average base salaries paid by companies in the Comparison
Group and other similarly situated companies.
CASH INCENTIVE PLAN
The Compensation Committee is of the view that a portion of the total cash
compensation for executive officers should be subject to the attainment by the
Company of specific earnings criteria. This approach creates a direct incentive
for executive officers to achieve desired performance goals and places a
significant percentage of each executive officers compensation at risk. Under
the Company's Incentive Compensation Plan, adopted by the Compensation Committee
on November 1, 1991, the executive officers of the Company receive a cash bonus,
based on a percentage of annual base salary, in the event the Company achieves
certain predetermined earnings per share criteria. Participation in the
Incentive Compensation Plan is limited to a select group of management who have
a material impact on Company performance. The participants are selected by the
Compensation Committee and include the executive officers and the wardens. The
11
<PAGE> 15
Compensation Committee establishes a minimum target for earnings per share
annually, and the level of attainment of such target results in varying payouts.
The Committee establishes the potential bonuses and earnings per share criteria
based on the Committee's judgment as to desirable financial results for the
Company and the appropriate percentage of compensation which should be based on
the attainment of such results. In 1997, none of the quarterly earnings targets,
grossed up for the proposed bonuses, were met. Accordingly, no cash bonuses were
paid in 1997.
STOCK INCENTIVE PLANS
The Compensation Committee believes that long-term equity incentives are a
key component of its executive compensation program. The Company's existing
stock option plans authorize the issuance of both incentive and nonqualified
stock options to officers, key employees and wardens of the Company. The members
of the Compensation Committee participate in the Directors' Plan, which is
administered by the Board of Directors, and no member of the Compensation
Committee is eligible for the grant of an option under any other stock option
plan. Subject to the general limits prescribed by the Stock Incentive Plans, the
Compensation Committee has the authority to determine the individuals to whom
stock options are awarded and the terms of the options and the number of shares
subject to each option. Stock options are granted to executive officers
primarily based on the officers' actual and potential contribution to the
Company's growth and profitability as well as the practices of companies such as
those included in the Comparison Group. The number of options granted by the
Committee is based on its judgment that this number is appropriate and desirable
considering each employee's actual and potential contribution to the Company.
The assessment of actual and potential contribution is based on the Committee's
subjective evaluation of each executive officer's ability, skills, efforts and
leadership. Option grants are designed to retain executive officers and motivate
them to enhance shareholder value by aligning the financial interest of
executive officers with those of shareholders. Stock options also provide an
effective incentive for management to create shareholder value over the long
term since the full benefit of the compensation package cannot be realized
unless an appreciation in the price of the Company's Common Stock occurs over a
number of years.
The Committee has determined that in addition to stock options, the Company
should have the flexibility to issue other stock-based incentives as are
included in the Company's Stock Bonus Plan and the Company's 1995 Employee Stock
Incentive Plan, including, without limitation, stock appreciation rights,
restricted stock, deferred stock, stock purchase rights and/or other stock-based
awards. In 1995, the Committee authorized deferred share agreements with the
Chief Executive Officer and certain other key employees providing for the
potential issuance of a maximum of 337,024 shares of the Company's Common Stock.
The deferred shares do not vest until ten years from the date of grant. The
deferred shares will carry no voting rights or dividend rights until such time
as the shares are actually issued. The Committee entered into the deferred share
agreements in recognition of the significant efforts expended by these officers
to consummate certain acquisitions in 1994 and 1995 and to position the Company
as the leading provider of private prison management.
Executive officers of the Company may also participate in the ESOP.
Executive officers participate in the ESOP on the same terms as non-executive
employees who meet the applicable eligibility criteria, subject to any legal
limitations on the amounts that may be contributed or the benefits that may be
payable under the ESOP. The Company makes contributions to the ESOP on behalf of
the employees and also matches employee contributions up to certain levels.
Benefits, which become 40% vested over four years of service and 100% vested
over five years of service, are paid on death, retirement or termination. All
contributions to the ESOP are made or invested in the Company's Common Stock.
The Committee believes that these features tend to further align the employees'
and shareholders' long-term financial interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee's basis for compensation of the Chief Executive
Officer is derived from the same considerations addressed above. Mr. Crants
participates in the same executive compensation plans available to the other
executive officers. In 1997, the Compensation Committee increased Mr. Crants'
salary from $350,000 to $362,250, and granted Mr. Crants incentive stock options
to purchase 15,000 shares of Common Stock. The compensation levels established
for Mr. Crants were determined by the Committee
12
<PAGE> 16
based on its judgment that these levels were appropriate and desirable in light
of his actual and potential contribution to the Company. The assessment of
actual and potential contributions was based on the Committee's subjective
evaluation of Mr. Crants' abilities, skills, efforts and continued leadership.
TAX DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility on the Company's tax return of compensation over $1 million to any
of the Named Executive Officers of the Company unless, in general, the
compensation is paid pursuant to a plan which is performance-related, non-
discretionary and has been approved by the Company's shareholders. The
Compensation Committee's policy with respect to Section 162(m) is to make every
reasonable effort to ensure that compensation is deductible to the extent
permitted while simultaneously providing Company executives with appropriate
rewards for their performance. Any grants of options under any of the Company's
stock option plans are designed to satisfy the performance-based compensation
requirements of Section 162(m).
SUMMARY
The Committee believes that the mix of base salaries, variable cash
incentives and the potential for equity ownership in the Company represents a
balance that will motivate the management team to continue to produce strong
returns. The Committee further believes this program strikes an appropriate
balance between the interests and needs of the Company in operating its business
and appropriate rewards based on stockholder value.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Samuel W. Bartholomew, Jr., Chairman
William F. Andrews, Member
Joseph F. Johnson, Jr., Member
R. Clayton McWhorter, Member
13
<PAGE> 17
PERFORMANCE GRAPH
The following line graph is a comparison, for the period of five years
commencing December 31, 1992 and ending December 31, 1997, of the yearly
percentage change in the cumulative total shareholder return on the Company's
Common Stock with the cumulative total return of the Standard & Poor's 500
Composite Index and a Peer Group Index consisting of companies that are either
direct competitors of the Company or other regional service organizations with
similar market capitalization to the Company. The Board of Directors believes
that these companies generally possess assets, liabilities and operations more
similar to those of the Company than other publicly-available indices. The graph
assumes an investment of $100 on December 31, 1992, a reinvestment of dividends
and actual increase of the market value of the Company's Common Stock relative
to the initial investment of $100. The comparisons in this table are required by
the Commission and are not intended to forecast or be indicative of possible
future performance of the Company's Common Stock.
<TABLE>
<CAPTION>
Measurement Period S&P 500
(Fiscal Year Covered) Corrections Corp Peer Group* Composite
<S> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 130.91 $78.23** 110.03
12/31/94 234.55 84.06 111.53
12/31/95 1080.00 136.78 153.45
12/31/96 1774.55 153.27 188.68
12/31/97 2156.36 177.69 251.64
</TABLE>
- ---------------
* The Peer Group includes AMRESCO, Chattan, Inc., Command Security Corporation,
Correctional Services Corp. (formerly known as Esmor Corporation), Hospital
Staffing Services, Inc., Insituform Technology, Inc., Medalliance, Inc.,
Nichols Research Corporation, Phycor, Inc., Pinkertons, Inc., Proffitts,
Inc., REN-Corporation -- USA, Republic Automotive Parts, Inc., and Wackenhut
Corrections. (Medalliance stopped trading stock on November 10, 1995 and REN
Corp. stopped trading stock on November 1, 1995; therefore, they have been
pulled from the Peer Group after December 31, 1994.)
** The value of the Peer Group on December 31, 1993 has previously been reported
as $75.99 and has not included the values for two members of the Peer Group
(AMRESCO and Chattan, Inc.). Values for these two members, which were
previously unavailable, have become available and have been used in
calculating the value reported herein.
14
<PAGE> 18
SECURITY OWNERSHIP BY DIRECTORS, OFFICERS,
AND CERTAIN BENEFICIAL OWNERS
COMMON STOCK
The following table sets forth, as of March 17, 1998, the number of shares
of the Company's Common Stock, beneficially owned by (i) each person known to
the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) each director (and nominee for director) of the
Company, (iii) the Named Executive Officers, and (iv) all of the Company's
directors and executive officers, as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS (2)
- ---------------- --------------- ----------
<S> <C> <C>
Sodexho Alliance S.A........................................ 13,976,209(3) 15.5%
FMR Corp. ("FMR")........................................... 4,360,000(4) 5.4
Thomas W. Beasley........................................... 2,770,600(5) 3.5
Doctor R. Crants............................................ 1,606,066(6) 2.0
Lucius E. Burch, III........................................ 1,053,050 1.3
William F. Andrews.......................................... 262,593(7) *
Samuel W. Bartholomew, Jr................................... 228,500(8) *
Jean-Pierre Cuny............................................ 30,000(9) *
Joseph F. Johnson, Jr....................................... 140,000(10) *
R. Clayton McWhorter........................................ 61,000(11) *
David L. Myers.............................................. 151,696(12) *
Darrell K. Massengale....................................... 164,022(13) *
Charles A. Blanchette, Jr................................... 90,398(14) *
All executive officers and directors and nominees
for director) as a group (18 persons)..................... 7,025,737(15) 8.6
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of the outstanding Common
Stock
(1) Includes shares as to which such person directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise has or
shares voting power and/or investment power of these terms are defined in
Rule 13d-3(a) of the Exchange Act. Shares of Common Stock underlying
options and warrants to purchase Common Stock, which are exercisable, or
become exercisable within sixty days after the Record Date, are deemed to
be outstanding for the purpose of computing the outstanding Common Stock
owned by the particular person and by the group, but are not deemed
outstanding for any other purpose.
(2) Based upon 80,187,742 shares of Common Stock issued and outstanding.
(3) Sodexho's address is 3 Avenue Newton, 78180 Montigny-le-Bretonneux, France.
Includes 2,725,807 shares of Common Stock issuable upon conversion of
certain convertible notes; 4,400,000 shares issuable upon conversion of
certain warrants, 30,000 shares issuable upon the exercise of certain
options issued to Mr. Cuny and transferred to Sodexho and approximately
2,930,402 shares issuable upon conversion of certain convertible
subordinated notes which Sodexho is entitled to purchase pursuant to a
forward contract with the Company. Such information is based solely on the
Schedule 13D filed by Sodexho with the Commission in April 1996. See
"Certain Relationships and Related Transactions."
(4) FMR's address is 82 Devonshire Street, Boston, Massachusetts 02109.
Pursuant to information contained in its Schedule 13G filed with the
Commission in February 1998, Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR and an investment advisor, claims beneficial
ownership of 4,220,700 of the shares; Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR and a bank as defined under the Exchange
Act, claims beneficial ownership of 99,300 shares; and Fidelity
International Limited, a former subsidiary of FMR which provides investment
advisory services to Fidelity Management & Research Company, claims
beneficial ownership of 40,000 shares.
(5) Mr. Beasley's address is Route 2, Box 305, Burns, Tennessee 37029. Includes
60,000 shares issuable upon the exercise of options, 18,000 shares owned by
Mr. Beasley's wife, 29,956 shares allocated to Mr. Beasley pursuant to the
Company's ESOP, and 1,228,720 shares held in a grantor retained annuity
trust for which Mr. Beasley serves as trustee.
(6) Includes 415,000 shares issuable upon the exercise of options, and 49,329
shares allocated to Mr. Crants pursuant to the ESOP. Does not include 6,400
shares held in trust for Mr. Crants' children, beneficial ownership of
which is disclaimed.
(7) Includes 4,000 shares owned of record by children of Mr. Andrews.
(8) Includes 180,000 shares issuable upon the exercise of options and 800
shares owned by minor children of Mr. Bartholomew.
(9) Mr. Cuny serves as the Senior Vice President of The Sodexho Group, an
affiliate of Sodexho. Mr. Cuny beneficially owns 30,000 shares issuable
upon the exercise of options. Does not include 13,976,209 shares
beneficially held by Sodexho.
15
<PAGE> 19
(10) Includes 140,000 shares issuable upon the exercise of options, including
80,000 shares issuable upon the exercise of options, the grant of which is
subject to shareholder approval. See "Proposal 3 -- Ratification of the
Grant to Joseph F. Johnson, Jr. of an option to purchase shares of the
Company's Common Stock."
(11) Includes 60,000 shares issuable upon the exercise of options.
(12) Includes 131,400 shares issuable upon the exercise of options, 720 shares
owned by children of Mr. Myers, and 19,096 shares allocated to Mr. Myers
pursuant to the ESOP.
(13) Includes 59,000 shares issuable upon the exercise of options, 280 shares
owned jointly by Mr. Massengale and his wife and 15,142 shares allocated to
Mr. Massengale pursuant to the ESOP.
(14) Includes 57,000 shares issuable upon the exercise of options and 19,978
shares allocated to Mr. Blanchette pursuant to the ESOP.
(15) Includes an aggregate of 1,367,542 shares issuable upon the exercise of
options and 223,689 shares allocated to directors and executive officers
pursuant to the ESOP.
PREFERRED STOCK
In October 1997, the Company issued 379,882 shares of Preferred Stock to
the shareholders of American Corrections Transport, Inc. in a share exchange for
shares of Common Stock. The share exchange was consummated in connection with
the Company's acquisition of TransCor America, Inc. in December 1994. The
holders of the Preferred Stock have voting rights identical to those of holders
of Common Stock. However, the issued and outstanding shares of Preferred Stock
represent less than 1% of all shares entitled to vote at the Annual Meeting
(including shares of both Common Stock and Preferred Stock), and no director or
executive officer of the Company owns any shares of Preferred Stock.
Accordingly, no ownership table with respect to the Preferred Stock is presented
in this Proxy Statement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and any person beneficially owning more than 10% of a
registered class of the Company's equity security to file with the Commission
and the New York Stock Exchange reports of ownership and changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by Commission regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished to the
Company during fiscal 1997 or written representations that no other reports were
required, the Company believes that during the 1997 fiscal year, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, with the exception that the Vice
President, Business Development of the Company filed one Form 4 late regarding
the sale of 10,180 shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sodexho Alliance, S.A.
In June 1994, the Company entered into an international strategic alliance
with Sodexho for the purpose of pursuing prison management business outside the
United States. In connection with the formation of the 1994 international
alliance, Sodexho purchased 2,800,000 shares of Common Stock at a purchase
price, as adjusted, of $3.75 per share and a $7,000,000 Convertible Subordinated
Note bearing interest at 8.5% with a conversion price, as adjusted, of $3.58 per
share. In consideration of Sodexho's agreement to enter into the international
strategic alliance with the Company, the Company, among other things, (i)
entered into a forward contract pursuant to which Sodexho is entitled to
purchase at any time on or before December 31, 1997, which was subsequently
extended until December 31, 1999, up to $20,000,000 aggregate principal amount
of the Company's convertible subordinated notes bearing interest at LIBOR plus
1.35%, with a conversion price, as adjusted, of $6.875 per share, and (ii)
granted Sodexho a presently exercisable warrant expiring on December 31, 1998,
covering 4,400,000 shares of Common Stock with an exercise price, as adjusted,
of $3.95 per share. In December 1996, in connection with Sodexho's purchase of
shares in UK Detention Services, a joint venture owned by the Company, the
Company agreed to extend the expiration date of the warrants to December 31,
1999. In June 1995, as a result of its preemptive right triggered in connection
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<PAGE> 20
with the issuance of shares of Common Stock to the shareholders of Concept
Incorporated, Sodexho purchased 1,090,000 shares of Common Stock from the
Company at a purchase price, as adjusted, of $7.625 per share. In April 1996, as
a result of its preemptive right triggered in connection with the issuance of
7.5% convertible notes, Sodexho purchased $30,000,000 in convertible notes from
the Company. The notes bear interest at 7.5% payable quarterly and are
convertible into shares of the Company's Common Stock at a conversion price, as
adjusted, of $25.91 per share.
Sodexho has also agreed to limit its ownership interest in the Company to
25% (or 30% in certain limited circumstances) through June 23, 1999, subject to
earlier termination upon the occurrence of a change in control (the "Standstill
Period"). A change in control is defined as: (i) a party acquiring more than 20%
of the Common Stock; (ii) a 10% shareholder publicly announcing an intent to
commence a tender offer for the Company; (iii) the termination of Doctor R.
Crants as the Company's chief executive officer or the failure by Doctor R.
Crants to own at least 2% of the Common Stock; (iv) if the Company's Board of
Directors shall no longer consist of a majority of Continuing Directors; or (v)
an acquirer shall publicly announce an intent to commence a tender offer and the
Company's Board publicly recommending that the shareholders accept such tender
offer. "Continuing Directors" means the directors of the Company as of June 23,
1994 and each other director, if such other director's nomination for election
to the Board of Directors of the Company is recommended by a majority of the
then Continuing Directors.
During the Standstill Period, Sodexho has agreed to vote its Common Stock
in the same fashion as either the Company's public shareholders or the Company's
Board of Directors, at Sodexho's option, on the election of directors and
certain other matters. Sodexho has also agreed that, during the Standstill
Period, it will not solicit proxies under any circumstances, or become a
participant in any election contest, or make an offer for the acquisition of
substantially all of the assets or capital stock of the Company or induce or
assist any other person to make such an offer. Until Sodexho's ownership in the
Company is reduced to below 400,000 shares of Common Stock, Sodexho has the
right to nominate one member to the Company's Board of Directors and, without
Sodexho's consent, the Company may not increase the number of directors on the
Company's Board of Directors to eight or more. In addition, Sodexho has a
preemptive right to purchase additional shares of Common Stock or securities
convertible into or exchangeable for Common Stock in any issuance of securities
by the Company in any amount necessary to enable Sodexho to maintain a
percentage ownership in the Company equal to 20% of the Common Stock on a fully
diluted basis. The Company plans to use the proceeds from these future
financings to fund new capital projects. In consideration of the placement of
the aforementioned securities and these future financings, the Company agreed to
pay Sodexho $3,960,000 over a four-year period ending in 1998.
Doctor R. Crants expects to become a member of the Board of Directors of
Sodexho Marriott Services, Inc. ("SMS"). It is anticipated that SMS will be
formed on or about the date of this Proxy Statement, when Marriott
International, Inc. acquires the North American food service and facilities
management operations of Sodexho. As a result of such acquisition, SMS will be
the largest food service and facilities management company in North America.
Sodexho will own 49% of SMS.
CCA Prison Realty Trust
On July 18, 1997, the Company and certain of its subsidiaries sold nine of
its correctional and detention facilities (the "Initial Facilities") to CCA
Prison Realty Trust, a Maryland real estate investment trust ("Prison Realty"),
for an aggregate sale price of $308.1 million. Prison Realty used the proceeds
from an initial public offering of its common shares in July 1997 to acquire the
Initial Facilities from the Company. Pursuant to the Commission's request, the
Company was required to act as a co-registrant in the registration of the common
shares pursuant to the offering.
Prison Realty acquired the real property and all tangible property
associated with each of the Initial Facilities. Simultaneously with the purchase
of the Initial Facilities from the Company, the Company entered into agreements
with Prison Realty to lease the facilities from Prison Realty pursuant to
long-term, non-cancellable triple net leases which require the Company to pay
all operating expenses, taxes, insurance and other costs (the "Leases"). All of
the Leases provide for base rent with certain annual escalations and have
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<PAGE> 21
primary terms ranging from 10-12 years which may be extended at the fair market
rates for three additional five-year periods upon the mutual agreement of the
Company and Prison Realty.
In connection with the purchase of the Initial Facilities, the Company and
certain of its subsidiaries entered into option agreements (the "Option
Agreements") pursuant to which the Company and certain of its subsidiaries
granted Prison Realty exclusive options to acquire any or all of five
correctional facilities until July 18, 2000 for a purchase price equal to the
Company's cost of developing, constructing, and equipping such facilities plus
5% of such costs. The Option Agreements provide that if acquired, such option
facilities could be leased to the Company on terms substantially similar to
those contained in the Leases. To date, Prison Realty has exercised its option
to acquire two such facilities for an aggregate purchase price of $108.6
million. In addition, in connection with the sale and leaseback arrangements,
the Company and Prison Realty entered into a right to purchase agreement (the
"Right to Purchase Agreement") pursuant to which Prison Realty has an option to
acquire at fair market value and lease-back to the Company any correction or
detention facility acquired or developed and owned by the Company in the future
for a period of three years following the date inmates are first received at
such facility. For facilities acquired during the first five years of the Right
to Purchase Agreement, the initial annual rental rate for facilities leased back
to the Company will be the greater of (i) fair market rental rate as determined
by Prison Realty and the Company, or (ii) 11% of the purchase price of such
facilities. For facilities acquired thereafter, the initial annual rental rate
on such facilities will be the fair market rental rate as determined by the
Company and Prison Realty. Additionally, the Company will grant Prison Realty a
right of first refusal to acquire any CCA-owned correctional or detention
facility should the Company receive an acceptable third party offer to acquire
any such facility. To date, Prison Realty has acquired two facilities pursuant
to the Right to Purchase Agreement for an aggregate purchase price of $74.4
million.
Doctor R. Crants is the Chairman, Chief Executive Officer and President of
the Company and the Chairman of the Board of Trustees of Prison Realty. D.
Robert Crants, III, President of Prison Realty, is the son of Doctor R. Crants.
Doctor R. Crants and D. Robert Crants, III, as well as certain other trustees or
officers of Prison Realty or directors or officers of the Company, also own,
directly or indirectly, shares in both companies. J. Michael Quinlan, Chief
Executive Officer and trustee of Prison Realty, is a former employee of the
Company. C. Ray Bell, a trustee of Prison Realty, is the principal of a
construction company which, as a part of its business, builds correctional and
detention facilities, including facilities for the Company.
Stokes & Bartholomew, P.A.
Stokes & Bartholomew, P.A., of which Mr. Bartholomew is a partner, provided
legal services to the Company in 1997, and it is anticipated that Stokes &
Bartholomew, P.A. will provide legal services to the Company in 1998. The fees
paid in 1997 by the Company in connection with such legal services were
approximately $1,109,000.
Thomas W. Beasley
In 1997, the Company paid Thomas W. Beasley, Chairman Emeritus of the
Company, $175,000 for consulting services provided to the Company.
On September 30, 1997, the Company purchased 122,500 shares of Common Stock
from Mr. Beasley, at an aggregate purchase price of $5,328,750. The purchase
price per share was $43.50, which represented the closing price of the Common
Stock on the New York Stock Exchange on that date. The shares acquired are held
in treasury as part of the Company's stock repurchase program.
Joseph F. Johnson, Jr.
In 1997, Joseph F. Johnson, Jr., a director of the Company, was paid a fee
of $382,000 for consulting services delivered in connection with respect to the
Company's successful consummation of the contracts with Washington, D.C. for the
housing of inmates in the Northeast Ohio Correctional Facility and the Community
Treatment Facility. In addition, in 1997, the Company paid $911,000 to National
Corrections and Rehabilita-
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<PAGE> 22
tion Corporation ("NCRC") with respect to rehabilitation services rendered at
the Dallas County State Jail facility. Mr. Johnson is an owner and serves as
Non-Executive Chairman of NCRC.
Doctor R. Crants
On March 2, 1997, the Company purchased 200,000 shares of Common Stock from
Doctor R. Crants, Chief Executive Officer of the Company, at an aggregate
purchase price of $7,600,000. The purchase price per share was $38.00, which
represented the closing price of the Common Stock on the New York Stock Exchange
on that date. The shares acquired are held in treasury as part of the Company's
stock repurchase program.
PROPOSAL 2
APPROVAL OF NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
In February 1998, the Compensation Committee and Board of Directors adopted
the Corrections Corporation of America Non-Employee Director's Compensation Plan
(the "Plan"), subject to shareholder approval. Accordingly, at the Annual
Meeting, shareholders will be asked to approve the Plan.
The purpose of the Plan is to encourage equity ownership in the Company by
Non-Employee Directors whose continued services are considered essential to the
Company's continued progress and thus to provide them with a further incentive
to remain as directors of the Company.
PRINCIPAL FEATURES OF THE PLAN
The full text of the Plan is set forth as Appendix A hereto, and readers
are urged to refer to it for a complete description of the Plan. The summary of
the principal features of the Plan which follows is qualified entirely by such
reference.
ELIGIBLE PARTICIPANTS
Under the Plan, directors of the Company who are not employees of the
Company or any subsidiary or affiliate of the Company would be eligible to
participate in the Plan beginning on June 1, 1998, the first day of the
inaugural plan year, which runs from June 1 of one year to May 31 of the next
year (the "Plan Year"). Should the proposed slate of directors be approved by
the shareholders, five directors will be eligible to participate in the Plan
(the "Non-Employee Directors").
ADMINISTRATION
The Board of Directors or a committee consisting of two or more directors,
each of whom is a "non-employee director," as defined in Rule 16b-3 of the
Exchange Act, shall supervise and administer the Plan (the "Committee").
Currently, the Plan is administered by the Compensation Committee. Members of
the Board of Directors receive no additional compensation for their services in
connection with the administration of the Plan.
NUMBER OF SHARES SUBJECT TO THE PLAN
A total of 100,000 shares of Common Stock are to be reserved for issuance
pursuant to the Plan. The Company expects to register the shares with the
Commission after the Annual Meeting, if the Plan is approved by shareholders.
FORM OF AWARDS
Under the Plan, a Non-Employee Director may elect to receive up to 100
percent of the value of his annual retainer fee (the "Annual Retainer") in the
form of Common Stock of the Company (a "Common Stock Payment") in lieu of cash.
The Annual Retainer under the Plan means the amount of cash
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<PAGE> 23
compensation to be paid to each director annually as determined by the Board of
Directors. Currently, Non-Employee Directors are scheduled to receive an Annual
Retainer of $24,000, beginning on June 1, 1998.
PLAN OPERATION
Payment of the Annual Retainer, whether in the form of Common Stock or in
cash, pursuant to this Plan, shall be made as follows:
(a) The Common Stock Payment, if any, shall be paid in advance at the
beginning of the Plan Year on the Payment Date (i.e., a participating director
will be paid an amount up to $24,000 in Common Stock in accordance with such
director's annual election on June 1 (the "Payment Date")). The amount of each
Non-Employee Director's Annual Retainer to be paid in cash shall be paid
quarterly (according to the quarterly periods of the Plan Year) in advance.
(b) The number of shares of Common Stock to be issued in payment of the
Annual Retainer that have been denominated in dollars shall be calculated on the
basis of the Fair Market Value (as defined in the Plan) on the first business
day preceding the Payment Date as of which such shares of Common Stock are to be
issued.
EFFECTIVE DATE AND DURATION
The effective date of the Plan shall be June 1, 1998, if such Plan is
approved by the Company's shareholders and shall terminate only upon action of
the Board of Directors. The Plan shall terminate on May 31, 2008, unless earlier
terminated by the Board of Directors or the Committee. No Common Stock Payments
shall be made after the date on which the Plan terminates. The applicable terms
of the Plan, and any terms and conditions applicable to the Common Stock
Payments made prior to such date, shall survive the termination of the Plan and
continue to apply to such Common Stock Payments.
AMENDMENTS
The Board of Directors shall have the right to amend, modify, suspend or
terminate the Plan at any time for any purpose; provided, that following
approval of the Plan by the Company's shareholders, the Company will seek
shareholder approval for any change to the extent required by applicable law,
regulation or rule or any rule or regulation of the New York Stock Exchange (or
any other applicable national stock exchange).
ADJUSTMENTS
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, or other change in the corporate
structure or capitalization affecting the Company's present Common Stock, at the
time of such event, the Board or the Committee shall make appropriate
adjustments to the number (including the aggregate number of shares that may be
issued under the Plan) and kind of shares to be issued under the Plan and the
price of any Common Stock Payment.
FEDERAL INCOME TAX CONSEQUENCES
The rules governing the tax treatment of Common Stock Payments are quite
technical. Therefore, the description of the federal income tax consequences set
forth below is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change, as are their
interpretations, and their applications may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the federal income tax laws.
Common Stock Payment
A Non-Employee Director who elects to receive his compensation in the form
of a Common Stock Payment recognizes ordinary income and the Company receives a
deduction in an amount equal to the fair market value of the Common Stock
Payments as and when they become payable.
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The Board of Directors believes that the Company's ability to make a Common
Share Payment will provide significant incentives to Non-Employee Directors who
contribute and are expected to contribute materially to the continued success of
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE NON-EMPLOYEE
DIRECTORS' COMPENSATION PLAN.
PROPOSAL 3
RATIFICATION OF THE GRANT TO JOSEPH F. JOHNSON, JR.
OF AN OPTION TO PURCHASE SHARES OF THE COMPANY'S COMMON STOCK
Subject to the vote of the shareholders of the Company, pursuant to an
Option Agreement dated March 31, 1997 (the "Option Agreement"), the Board of
Directors granted to Joseph F. Johnson, Jr., a director of the Company, an
option to purchase up to 80,000 shares of the Common Stock of the Company at an
exercise price of $18.25 per share (the "Option"), an approximate 25% discount
on the closing price for the Common Stock on the New York Stock Exchange on the
date of the grant.
The Option is exercisable and at any time or from time to time during the
ten (10) year period beginning on the date of the grant of the Option, subject
to earlier termination in the event of Mr. Johnson's death or a "change in
control" (as defined in the Option Agreement) of the Company. In addition to the
payment of cash upon exercise of the Option, the Company, in its sole
discretion, may allow for Mr. Johnson to alternatively pay for Common Stock or
exercise of the Option in the form of a Common Stock Option (as authorized in
the Option Agreement) or unrestricted shares of Common Stock already owned by
Mr. Johnson (based in each case on the fair market value of the Common Stock
Option on the date the Option is exercised, and as is determined by the Board).
Upon issuance of the Option, there are no federal income tax consequences to the
Company or to Mr. Johnson. Upon exercise of the Option, Mr. Johnson will realize
taxable income to the extent of the difference between the exercise price and
the market price for the Common Stock on the day of exercise, and the Company
will have a deductible expense equal to Mr. Johnson's realized taxable income.
The full text of the Option Agreement is set forth as Appendix B hereto, and
readers are urged to refer to it for a complete description of the Option
Agreement. The preceding summary of the principal features of the Option
Agreement is qualified entirely by such reference.
The Company granted Mr. Johnson the Option in consideration for his
extensive efforts in building and facilitating the Company's business
relationship with certain governmental departments, agencies, and entities. In
particular, the Company believes Mr. Johnson was instrumental in the
establishment of the Company's relationship with the District of Columbia,
including the (i) purchase from and lease-back to the Government of the District
of Columbia the Correctional Treatment Facility in Washington, D.C., and the
subsequent operation and management thereof, in 1997; (ii) obtaining of the
management contract for the housing of approximately 1,725 District of Columbia
inmates in the Northeast Ohio Correctional Center facility operated by the
Company; and (iii) drafting and submission of responses to numerous requests for
proposals elicited by the District. Mr. Johnson's efforts have exceeded his
duties and obligations to the Company as a member of its Board of Directors. The
Company believes that in order to adequately compensate Mr. Johnson for his
efforts and to incentivize his continued role in obtaining business from the
District of Columbia and other governmental entities, the Option is appropriate
and necessary.
For the reasons stated above, the Board of Directors has determined that
the Option is the best method by which to compensate Mr. Johnson for his
services and is in the best interest of the Company and its shareholders. The
Company, however, intends to make application with the New York Stock Exchange
for the listing of the shares of Common Stock that may be issued upon exercise
of the Option. The favorable vote of a majority of the votes cast at the Annual
Meeting in favor of the grant of the Option to Mr. Johnson is a prerequisite to
the Exchange's listing of such shares. In the event the majority of the votes
cast at the Annual Meeting are against the grant of the Option to Mr. Johnson,
the Board will consider the vote in determining the appropriate manner in which
to compensate Mr. Johnson for his efforts on behalf of the Company.
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<PAGE> 25
The following table sets forth the benefits that may be received by Mr.
Johnson if the grant of the Option is approved. The closing price of the Common
Stock on March 17, 1998 was $32.50 per share.
GRANT OF OPTION TO PURCHASE COMMON STOCK
TO JOSEPH F. JOHNSON, JR.(1)
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF SHARES DOLLAR VALUE($)
- ----------------- ---------------- ---------------
<S> <C> <C>
Joseph F. Johnson, Jr., Director............................ 80,000 $2,600,000
</TABLE>
- ---------------
(1) Under this grant of option to Joseph Johnson, Jr., no options or other
benefits will accrue to any current directors, any executive officers, or
any other current employees of the Company other than Mr. Johnson.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE GRANT OF THE OPTION TO
JOSEPH F. JOHNSON, JR.
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of the Company, upon the recommendation of the Audit Committee,
has selected the accounting firm of Arthur Andersen LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1998. Arthur
Andersen LLP has served as the Company's independent auditors since 1991 and is
considered by management of the Company to be well qualified. The Company has
been advised by that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity. A representative of Arthur Andersen LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate
questions.
Although the Company is not required to submit the ratification and
approval of the selection of its independent auditors to a vote of shareholders,
the Board of Directors believes that it is sound policy to do so. In the event
that the majority of the votes cast are against the selection of Arthur Andersen
LLP, the directors will consider the vote and the reasons therefor in future
decisions on the selection of independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE ACTION OF
THE BOARD OF DIRECTORS IN SELECTING THE FIRM OF ARTHUR ANDERSON LLP TO BE THE
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR 1998, AND TO PERFORM SUCH OTHER
SERVICES AS MAY BE REQUESTED.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholders of the Company wishing to submit a proposal for action at the
1999 annual meeting of the Company's shareholders, and to have such proposal
included in the Company's proxy materials relating to that meeting, must deliver
such proposal to the Company in writing at its principal offices not later than
December 1, 1998, and the proposals must meet certain eligibility requirements
of the Commission. Any such proposals should be mailed via certified mail,
return receipt requested, to: Corrections Corporation of America, Attention:
Darrell K. Massengale, 10 Burton Hills Boulevard, Nashville, Tennessee 37215.
ANNUAL REPORT AND FORM 10-K
All shareholders of record on the Record Date will receive with this Proxy
Statement a copy of the Company's 1997 Annual Report to Shareholders. The Annual
Report to Shareholders, however, is not part of the proxy solicitation
materials. Any shareholder who desires a copy of the Company's 1997 Annual
Report to Shareholders, or the Company's Annual report on Form 10-K for the year
ended December 31, 1997, as filed with the Commission, may obtain a copy without
charge by addressing a request to Corrections Corporation of America, Attention:
Darrell K. Massengale, 10 Burton Hills Boulevard, Nashville, Tennessee 37215.
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<PAGE> 26
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented and acted upon at the Annual Meeting other than those set forth in the
accompanying notice. However, if any other matters requiring a vote of the
shareholders should properly come before the Annual Meeting or any adjournment
thereof, each proxy will be voted with respect thereto in accordance with the
best judgment of the proxy holder.
By Order of the Board of Directors,
Doctor R. Crants,
Chairman of the Board, Chief Executive
Officer, and President
March 31, 1998
Nashville, Tennessee
YOUR COOPERATION IN GIVING THESE MATTERS YOUR
IMMEDIATE ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY
IS APPRECIATED.
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APPENDIX A
CORRECTIONS CORPORATION OF AMERICA
NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN
RECITALS
WHEREAS, Corrections Corporation of America (the "Company") pays its
Non-Employee Directors (as hereinafter defined) an Annual Retainer (as
hereinafter defined) as partial compensation for their services as directors of
the Company;
WHEREAS, the Board of Directors of the Company has determined it is in the
Company's best interest to encourage equity ownership in the Company by
Non-Employee Directors and to provide them with a further incentive to remain as
directors of the Company by allowing them to elect to receive between 50 and 100
percent of each of their Annual Retainer in shares of the Company's Common
Stock, $1.00 par value per share, (the "Common Stock"); and
WHEREAS, the terms and conditions under which such Non-Employee Directors
may elect to receive such Common Stock are set forth herein.
I. PLAN ADMINISTRATION AND ELIGIBILITY.
A. Purpose of the Plan.
The purpose of this Non-Employee Directors' Compensation Plan (the "Plan")
is to encourage equity ownership in the Company by Non-Employee Directors whose
continued services are considered essential to the Company's continued progress
and thus to provide them with a further incentive to remain as directors of the
Company.
B. Administration of the Plan.
The Board of Directors of the Company (the "Board") or any committee of the
Board (the "Committee") that will satisfy Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and any regulations promulgated
thereunder, as from time to time may be in effect, including any successor rule
("Rule 16b-3"), shall supervise and administer the Plan. The Committee, if such
is created, shall consist solely of two or more "non-employee directors," each
of whom shall be appointed by the Board. For purposes of determining who may
serve on the Committee only, a member of the Board shall be deemed to be a
"non-employee director" only if he satisfies such requirements as the Securities
and Exchange Commission may establish for "non-employee directors" under Rule
16b-3. Members of the Board or the Committee, if such is created, shall receive
no additional compensation for their services in connection with the
administration of the Plan.
The Board or the Committee, if such is created, may adopt such rules or
guidelines as they deem appropriate to implement the Plan. All questions of
interpretation of the Plan or of any shares issued under it shall be determined
by the Board or the Committee, if such is created, and such determination shall
be final and binding upon all persons having an interest in the Plan. Any or all
powers and discretion vested in the Board or the Committee, if such is created,
under this Plan may be exercised by any subcommittee so authorized by the Board
or the Committee, if such is created, that satisfies the requirements of Rule
16b-3.
C. Participation in the Plan.
Each member of the Board who is not an employee of the Company or its
subsidiaries (each, a "Non-Employee Director" or collectively, the "Non-Employee
Directors") shall be eligible to elect to receive up to 100 percent of each of
his Annual Retainer in Common Stock pursuant to the terms and conditions of the
Plan (a "Common Stock Payment"); provided however, that no Non-Employee Director
shall be allowed to request that less than 50% of such director's Annual
Retainer be received in Common Stock.
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<PAGE> 28
D. Shares Subject to the Plan.
The maximum number of shares of the Company's common stock, $1.00 par value
per share (the "Common Stock"), which may be issued under the Plan shall be
100,000. The limitation on the number of shares of Common Stock which may be
issued under the Plan shall be subject to adjustment as provided in Section
III(C) of the Plan.
II. TERMS OF THE PLAN.
A. Effective Date and Duration of the Plan.
The Plan shall take effect on June 1, 1998, pending adoption by the
shareholders of the Company at the Company's 1998 Annual Meeting of
Shareholders, and shall terminate only upon action by the Board. The Plan shall
terminate on May 31, 2008, unless earlier terminated by the Board of Directors
of the Company. No Common Stock Payments shall be made after the date on which
the Plan terminates. The applicable terms of the Plan, and any terms and
conditions applicable to the Common Stock Payments made prior to such date,
shall survive termination of the Plan and continue to apply to such Common Stock
Payments.
B. Time for Issuing Shares.
No payments shall be made in Common Stock pursuant to the Plan after the
date the Plan is terminated. The applicable terms of this Plan, and any terms
and conditions applicable to the Common Stock issued prior to such date, shall
survive the termination of the Plan and continue to apply to such Common Stock.
C. Terms and Conditions of the Plan.
i. Compensation Alternatives.
Commencing on June 1, 1998, a Non-Employee Director may make one election
to receive up to 100 percent of his Annual Retainer to be paid for the year
beginning on June 1, 1998, and ending on May 31, 1999 (the "Initial Plan Year"),
in Common Stock. Such election must be in writing and shall be delivered to the
Corporate Secretary of the Company no later than May 25, 1998. This election
shall be irrevocable and shall specify the applicable percentage of the Annual
Retainer that such participant wishes to receive in Common Stock; provided,
however, that no Non-Employee Director shall be allowed to request that less
than 50% of such director's Annual Retainer be received in Common Stock. Common
Stock payments pursuant to this paragraph will be made on July 1, 1998;
provided, however, that should a Non-Employee Director fail to make an election
by May 25, 1998, as provided in this paragraph, the Annual Retainer payable to
such director pursuant to this paragraph shall be paid in cash in quarterly
installments paid in advance on the first day of each quarter of the Initial
Plan Year.
For all subsequent years, a Non-Employee Director may make one election
(the "Annual Election") for the period from June 1 of one calendar year to May
31 of the next calendar year (the "Plan Year" or the "Election Period") to
receive up to 100 percent of each of his Annual Retainer in Common Stock. The
Annual Election must be in writing and shall be delivered to the Corporate
Secretary of the Company not later than May 25 of each year. The Annual Election
shall be irrevocable with respect to the Election Period for which it pertains
and shall specify the applicable percentage of the Annual Retainer that such
Non-Employee Director wishes to receive in Common Stock; provided, however, that
no Non-Employee Director shall be allowed to request that less than 50% of such
director's Annual Retainer be received in Common Stock. If a Non-Employee
Director fails to make a timely Annual Election for any Election Period in
accordance herewith, the Annual Retainer payable to such director for such
period shall be paid in cash on the Payment Dates (as hereinafter defined).
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<PAGE> 29
ii. Payment of Shares.
Payment of the Annual Retainer, whether in the form of Common Stock or in
cash, pursuant to this Plan, shall be made as follows:
(a) The amount of each Non-Employee Director's Annual Retainer to be
paid in Common Stock, if any, shall be annually paid in advance on June 1
of each Plan Year. The amount to be paid in cash, if any, shall be prorated
and paid quarterly, in equal amounts, on the Payment Dates (i.e., if the
Annual Retainer for directors is $24,000 for a given Election Period and he
or she elects 50% in Common Stock and 50% in cash, then $12,000 worth of
Common Stock will be paid on June 1 and $3,000 in cash paid on each of June
1, September 1, December 1, and March 1 of the Plan Year).
(b) The number of shares of Common Stock to be issued in payment of
retainers and fees that have been denominated in dollars shall be
calculated on the basis of the Fair Market Value (as hereinafter defined)
on the first Business Day preceding the Payment Date as of which such
Common Stock is to be issued.
iii. Form of Issuance of Common Stock.
Common Stock issued under the Plan shall be in either book entry form or in
certificate form pursuant to the instructions given by the Non-Employee Director
to the Company's transfer agent.
iv. Fractions of Shares.
The Company shall not issue fractions of shares of Common Stock. Whenever,
under the terms of the Plan, a fractional share of Common Stock would otherwise
be required to be issued, the Non-Employee Director shall be paid in cash for
such fractional share of Common Stock based upon the same Fair Market Value
which was utilized to determine the number of shares of Common Stock to be
issued on the Payment Date.
H. Benefit Upon Death.
In the event of a Non-Employee Director's death, any and all unpaid Annual
Retainer will be paid in accordance with such Non-Employee Director's then
current Annual Election to his estate, and such person's payments will be
transferable by will or pursuant to laws of descent and distribution applicable
to such person.
III. GENERAL PROVISIONS.
A. Assignments.
The rights and benefits accruing to the Company's Non-Employee Directors
under this Plan may not be assigned by any such director.
B. Limitation of Rights.
Neither the Plan, nor the issuance of any shares of Common Stock nor any
other action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain a
director for any period of time, or at any particular rate of compensation.
C. Share Adjustment.
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, share split, or other change in the corporate
structure or capitalization affecting the Company's Common Stock, at the time of
such event the Board or the Committee, if such is created, shall make
appropriate adjustments to the number (including the aggregate numbers specified
in Section I (D) above) and kind of shares to be issued under the Plan.
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<PAGE> 30
D. Amendment of the Plan.
The Board shall have the right to amend, modify, suspend or terminate the
Plan at any time for any purpose; provided, that following the initial approval
of the Plan by the Company's shareholders, the Company will seek shareholder
approval for any change to the extent required by applicable law, regulation or
rule or any rule or regulation of the New York Stock Exchange (or any other
applicable national stock exchange).
E. Definitions.
"Annual Retainer" shall mean the amount of cash compensation to which a
Non-Employee Director will be entitled to receive for serving as a director for
one Plan Year or Election Period, but shall not include reimbursement for
expenses, Meeting Fees, fees associated with service on any committee of the
Board or fees with respect to any other services to be provided to the Company.
"Business Day" shall mean, if relevant to a determination of the value of
Common Stock, a day on which shares of Common Stock are or could be traded on
the New York Stock Exchange (or other national stock exchange, or if not so
listed, could be traded over-the-counter). In all other cases, the term shall
mean a day on which the offices of the Company are open for the conduct of
business in the normal course.
"Fair Market Value" shall be the mean of the highest and lowest selling
prices for the Common Stock on the New York Stock Exchange on the date in
question, as reported in The Wall Street Journal, or if no sales of Common Stock
were made on that date, the mean of the highest and lowest prices of the Common
Stock on the first preceding day on which sales were made.
"Meeting Fees" shall mean the amount to which a Non-Employee Director will
be entitled to receive for attending meetings, whether annual or special, of the
Board and of any committee of the Board on which the Non-Employee Director
serves, or for any other fees to be paid to the members of the Board, but shall
not include reimbursement for expenses.
"Payment Date" shall mean June 1, September 1, December 1 and March 1 of
any Election Period, or if any such day is not a Business Day, on the first
Business Day following such day.
F. Compliance with Section 16 of the Exchange Act.
It is the Company's intent that the Plan comply in all respects with Rule
16b-3. If any provision of this Plan is found not to be in compliance with such
rule (or any successor provision), the provision shall be deemed null and void,
and the remaining provisions of the Plan shall continue in full force and
effect. All transactions under this Plan shall be executed in accordance with
the requirements of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. The Board or the Committee, if such is created, may, in
its sole discretion, modify the terms and conditions of this Plan in response to
and consistent with any changes in applicable law, rule or regulation.
G. Notice.
Any written notice to the Company required by any of the provisions of this
Plan shall be addressed to the Corporate Secretary of the Company and shall
become effective when it is received by the Corporate Secretary.
H. Governing Law.
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the law of the State of Tennessee and construed
accordingly.
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<PAGE> 31
APPENDIX B
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") is made this 31st day of March,
1997, by and between CORRECTIONS CORPORATION OF AMERICA, a Delaware corporation
(the "Company"), and JOSEPH F. JOHNSON, JR. ("Optionee").
WITNESSETH:
WHEREAS, to compensate Optionee for certain services rendered by Optionee
on behalf of the Company, the Board has authorized the Company to grant to
Optionee an option to purchase up to 80,000 shares of the common stock, $1.00
par value, of the Company (the "Common Stock") on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual understanding
and consideration of the parties, the parties hereby agree as follows:
1. Grant of Option. Upon and subject to the terms, restrictions,
limitations and conditions stated herein, and subject to approval by the
stockholders of the Company, the Company hereby grants to Optionee an
option (the "Option") to purchase up to 80,000 shares of Common Stock (the
"Option Shares") for a purchase price per share equal to $18.25. The
parties acknowledge that the Option shall constitute an option which is not
"an incentive stock option" under Section 422 of the Internal Revenue Code
of 1986, as amended.
2. Exercise. Subject to earlier termination pursuant to Section 4
below, Optionee (or in the event of Optionee's death during the term of the
Option, the personal representative of Optionee's estate) shall have the
right to exercise the Option at any time or from time to time during the
ten-year period beginning on the date of grant of the Option (the "Option
Period").
3. Method of Exercise. The Option may be exercised by giving written
notice of exercise to the Company specifying the number of Option Shares to
be purchased. Such notice shall be accompanied by payment in full of the
purchase price, either by check, note or such other instrument as the
Company may accept. In the sole discretion of the Company, payment may also
be made in the form of a Common Stock option or unrestricted shares of
Common Stock already owned by Optionee (based in each case on the fair
market value of the Common Stock option or shares of Common Stock on the
date the Option is exercised, as determined by the Board). No Option Shares
shall be issued until full payment therefor has been made.
4. Death of Optionee or Change in Control. In the event of Optionee's
death during the Option Term, the Option may be exercised by the personal
representative of Optionee's estate or by the legatee of Optionee for a
period of one year from the date of Optionee's death or until the
expiration of the Option Term, whichever period is the shorter.
In the event of a "change in control" of the Company as defined
herein, the Option evidenced hereby shall automatically terminate. For the
purpose of this Section 4, "change in control" shall mean the happening of
either of the following:
(i) any person or entity, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, other than the Company
or a wholly-owned subsidiary thereof or any employee benefit plan of the
Company or any of its subsidiaries, becomes the beneficial owner of the
Company's securities having 20% or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the
election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course
of business); or
B-1
<PAGE> 32
(ii) as a result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transaction less
than a majority of the combined voting power of the then outstanding
securities of the Company or any successor corporation or entity
entitled to vote generally in the election of the directors of the
Company or such other corporation or entity after such transaction are
held in the aggregate by the holders of the Company's securities
entitled to vote generally in the election of directors of the Company
immediately prior to such transaction.
5. Transferability. The Option shall not be transferable, except (a)
by will or the laws of descent and distribution, or (b) by Optionee to (i)
the spouse, children or grandchildren of Optionee ("Immediate Family
Members"), or (ii) a trust or trusts for the exclusive benefit of such
Immediate Family Members, provided that (y) there may be no consideration
for any such transfer, and (z) subsequent transfers of the Option shall be
prohibited except in accordance with this Section 5. Following transfer,
any transferred Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that
for purposes of this Agreement, the term "Optionee" shall be deemed to
refer to the transferee. Notwithstanding the provisions of this Section 5,
Optionee may not transfer an Option unless the transferee executes such
agreements or other documents (if any) as the Company in its discretion
deems appropriate or advisable.
6. Adjustments to Option Shares. In the event of any merger,
reorganization, consolidation, recapitalization, share dividend, share
split or other change in corporate structure affecting the Common Stock, an
adjustment shall be made in the number and option price of the Option
Shares, as determined in good faith by the Company.
7. Stockholder Approval. The grant of this Option is conditioned upon
and subject to the approval of the stockholders of the Company (the
"Stockholders"). The Company shall make every reasonable effort to have the
grant of the Option presented to and approved by the Stockholders at a
meeting of Stockholders called in accordance with the Bylaws of the
Company. Notwithstanding the foregoing, Company shall not be required to
call a special meeting of the Stockholders for the purpose of approving the
Option grant.
8. Governing Laws. This Agreement shall be construed, administered
and enforced according to the laws of the State of Tennessee; provided,
however, the Option may not be exercised except, in the reasonable judgment
of the Board, in compliance with exemptions under applicable state
securities laws of the state in which Optionee resides, and/or any other
applicable securities laws.
9. Successors. This Agreement shall be binding upon and inure to the
benefits of the heirs, legal representatives, successors and permitted
assigns of the parties.
10. Notice. Except as otherwise specified herein, all notices and
other communications under this Agreement shall be in writing and shall be
deemed to have been given if personally delivered or if sent by registered
or certified United States mail, return receipt requested, postage prepaid,
addressed to the proposed recipient at the last known address of such
recipient. Any party may designate any other address to which notices shall
be sent by giving notice of such address to the other parties in the same
manner provided herein.
11. Severability. In the event that any one or more of the provisions
or portion thereof contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable in any respect, the same shall not
invalidate or otherwise affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or portion thereof had never been contained herein.
12. Entire Agreement. This Agreement expresses the entire
understanding and agreement of the parties hereto with respect to such
terms, restrictions and limitations. This Agreement may be executed in two
or more counterparts, each of which shall be deemed and original but all of
which shall constitute one and the same instrument.
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<PAGE> 33
13. Violation. Any transfer, pledge, sale, assignment, or
hypothecation of the Option or any of the Shares subject thereto shall be a
violation of the terms of this Agreement and shall be void and without
effect.
14. Headings. Section headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
15. Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of
this Agreement, the party or parties who are thereby aggrieved shall have
the right to specific performance and injunction in addition to any and all
other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Doctor R. Crants
-----------------------------------
Title: Chief Executive Officer
OPTIONEE:
/s/ Joseph F. Johnson, Jr.
-------------------------------------
Joseph F. Johnson, Jr.
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<PAGE> 34
APPENDIX C
PROXY
CORRECTIONS CORPORATION OF AMERICA
ANNUAL MEETING OF SHAREHOLDERS
May 12, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Please sign and return in the enclosed envelope.)
The undersigned shareholder(s) of Corrections Corporation of America (the
"Company") hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, dated March 31, 1998, and hereby appoint(s)
Doctor R. Crants and Darrell K. Massengale, and each of them, proxies of the
undersigned, each with full power of substitution and revocation, and
authorize(s) them, or either of them, to vote the number of shares which the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Shareholders of the Company to be held on Tuesday, May 12, 1998, at
10:00 a.m., local time, at the Loews Vanderbilt Plaza Hotel, 2100 West End
Avenue, Nashville, Tennessee, and any adjournments or postponements thereof.
The Board of Directors recommends a vote "FOR" all of the nominees for
director listed below and "FOR" each of the following proposals:
1. ELECTION OF DIRECTORS.
<TABLE>
<S> <C>
[ ] FOR ALL NOMINEES NAMED [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
</TABLE>
NOMINEES:Samuel W. Bartholomew, Jr., Thomas W. Beasley, Lucius E. Burch, III,
Doctor R. Crants, Jean-Pierre Cuny, Joseph F. Johnson, R. Clayton
McWhorter
[ ]
- ------------------------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. APPROVAL OF THE NON-EMPLOYEE DIRECTORS' COMPENSATION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF THE GRANT OF AN OPTION TO PURCHASE 80,000 SHARES OF THE
COMPANY'S COMMON STOCK TO JOSEPH F. JOHNSON, JR., A DIRECTOR OF THE COMPANY.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. RATIFICATION OF THE ACTION OF THE BOARD OF DIRECTORS IN APPOINTING THE FIRM
OF ARTHUR ANDERSEN LLP TO BE THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY COME BEFORE THE MEETING OF
ANY ADJOURNMENTS AND POSTPONEMENTS THEREOF.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
PLEASE FULLY COMPLETE, DATE, PROPERLY SIGN, AND RETURN THIS PROXY PROMPTLY.
This Proxy, when properly executed, will be voted in accordance with the
directions given by the undersigned shareholder(s). If no direction is made,
this proxy will be voted FOR each nominee and FOR each of the proposals.
-------------------------------
Signature
Date: , 1998
------------------------
-------------------------------
Signature
Date: , 1998
------------------------
NOTE: PLEASE DATE AND SIGN EXACTLY AS YOUR NAME APPEARS ON YOUR SHARE
CERTIFICATE. IF SHARES ARE HELD BY MORE THAN ONE OWNER OR BY JOINT TENANCY, EACH
MUST SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, ETC., GIVE FULL TITLE AS SUCH. IF A CORPORATION IS A
SHAREHOLDER, PLEASE SIGN FULL CORPORATE NAME BY AUTHORIZED OFFICER. IF A
PARTNERSHIP OR LIMITED LIABILITY COMPANY IS A SHAREHOLDER, PLEASE SIGN IN SUCH
ORGANIZATION'S NAME BY AN AUTHORIZED PERSON. THE PROXY SHALL BE DEEMED A GRANT
OF AUTHORITY TO VOTE.
